Title 10 – Corporations and Associations

Chapter 31 – Directors and officers-nonprofit Corporations

Article 6 – Director’s Conflicting interest Transactions

• A. A transaction that is effected or proposed to be effected by a corporation, or by a subsidiary of the corporation or any other entity in which the corporation has a controlling interest, and that is not a director’s conflicting interest transaction shall not be enjoined, be set aside or give rise to an award of damages or other sanctions in a proceeding by a member or by or in the right of the corporation, because a director of the corporation, or any person with whom or with which the director has a personal, economic or other association, has an interest in the transaction.
• B. A director’s conflicting interest transaction shall not be enjoined, be set aside or give rise to an award of damages or other sanctions in a proceeding by a member by or in the right of the corporation, because the director, or any person with whom or with which the director has a personal, economic or other association, has an interest in the transaction, if either:
• 1. Directors’ action respecting the transaction was taken at any time in compliance with section 10-3862.
• 2. Members’ action respecting the transaction was taken at any time in compliance with section 10-3863.
• 3. The transaction, judged according to the circumstances at the time of commitment, is established to have been fair to the corporation.
• C. Any person seeking to have a director’s conflicting interest transaction enjoined, set aside or give rise to an award of damages or other sanctions shall first prove by clear and convincing evidence that subsection B of this section is not applicable.